After several financial and political setbacks, 38 Studios (the developer behind Kingdoms of Amalur Reckoning) laid off its entire staff. A source close to the incident broke this news to the Verge earlier today. GamesBeat contacted Curt Schilling, the studio’s founder, for comment.

The studio employed 379 people as of March 15. If confirmed, the news is a big setback for a company that was creating an ambitious multi-game transmedia property, built around a world created by sci-fi novelist R.A. Salvatore and Spawn animator/creator Todd McFarlane.

38 Studios’ trouble began when it missed the May 1 deadline for payment of $1.125 million owed to the Rhode Island Economic Development Corporation. Schilling met with the EDC shortly after the missed payment to discuss possible governmental assistance with paying back the studio’s loan debt.

“It’s a balance of making sure that 38 Studios is successful so that we can recoup our huge investment and not getting further exposed if the company, ultimately, is not gonna make it,” Governor Chafee said in a press conference. “That’s a tough balance.”

On May 18, 38 Studios managed to pay the $1.125 million but Providence news station WPRI reported that the company later did not make payroll.

[Update]

A former 38 Studios employee confirmed that an email Gamasutra ran regarding the layoffs is accurate:

The Company is experiencing an economic downturn. To avoid further losses and possibility of retrenchment, the Company has decided that a companywide lay off is absolutely necessary.

These layoffs are non-voluntary and non-disciplinary.

This is your official notice of lay off, effective today, Thursday, May 24th, 2012.

In light of the layoffs, many figures in the game development community are rallying around 38 Studio’s employees. Employees and founders of other game studios are using #38jobs on Twitter to share the message that they’re willing to hire people caught in the crossfire.

TellTale Games: “Telltale games is hiring for any of you at #38studios who were laid off today. #38jobs. Jobs include Character, UI, Cinematic artists, as well as programming and design positions too! telltalegames.com/company/jobs #38jobs”

PopCap Games: “Sad to hear about BHG and 38. Popcap has 60+ positions open, many of them in Seattle, SF and Vancouver #38jobs http://t.co/n7bsWbeb” – Giordano Contestabile

Irrational Games: “Irrational is still hiring for Bioshock Infinite. Even if you don’t see your job on the site still hit us up http://t.co/kY355yhm #38jobs” – Amanda Cosmos